UK VAT MOSS Overview
Notes: Post Brexit (i.e. from 1 January 2021), the tax treatment for all the countries outside the UK will be considered as Overseas. Therefore, UK VAT MOSS will not be applicable when digital services are provided for businesses that are located outside the UK. Instead, you can register for the Non-Union VAT MOSS scheme in an EU member state or register for VAT in each EU member state where you supply digital services to consumers.
HMRC’s VAT MOSS (Mini One Stop Shop) scheme is for businesses which supply Digital Services from UK to Consumers (Private individuals or non-business entities) in the European Union(EU). VAT will be levied according to the consumer’s location.
Broadcasting, telecommunications and e-services fall under the digital services category. Examples of e-services are app downloads, video on demand, gaming, e-books, anti-virus software etc.
Why VAT MOSS?
If your business from UK sells digital services to consumers in an EU country, VAT will be levied in accordance with the EU member country. Your business needs to be registered for VAT with every EU member state where the digital services are being sold which is a pretty strenuous process.
By registering for the UK VAT MOSS Scheme, your business can skip the process of registering with every EU member state where you supply digital services to consumers.
Once the business registers with the UK VAT MOSS scheme a single MOSS VAT Return and a VAT Payment should be submitted to HMRC every quarter. HMRC will take care of forwarding the return and tax payments to the tax authorities of the EU member states.
Conditions for VAT MOSS to be applicable?
VAT MOSS is applicable for digital services which are completely automated or electronically supplied over the internet with minimal/no human intervention.
These are the condition for VAT MOSS to be applicable:
- Supply digital services electronically.
- Digital services provided should be charged.
- Sell services only to Non-Business consumers in other EU member states.
- Sell services on your own website or platform (not using a third party platform / marketplace).
Who are not affected?
Communicating by email and sending attachments, using the internet to facilitate trade does not constitute e-services. Services that use the internet and does not come under the scheme:
- If order and processing are done electronically and goods are supplied physically. Also includes physical books, newspapers or journals.
- Consultants and Lawyers who advise their clients over email.
- Online ticket booking services for entertainment events, hotels or to hire transport.
- Online classroom courses, educational or professional courses delivered over the internet.
- Physical repair services for computer equipment made offline.
- Services for advertising on newspapers, posters and on television.